Universal Music Group, the world’s largest music company, and streaming giant Spotify announced a multi-year direct deal on Sunday that will affect both recording and publishing royalty rates.

The joint statement did not provide details on the value or specific length of the agreement, but said UMG and Spotify "will collaborate closely to advance the next era of streaming innovation."

"Artists, songwriters and consumers will benefit from new and evolving offers, new paid subscription tiers, bundling of music and non-music content, and a richer audio and visual content catalog," the statement read.

The deal notably "establishes a direct license between Spotify and Universal Music Publishing Group across Spotify's current product portfolio in the US and several other countries," the companies said.

Trade publication Billboard reported that this is the first direct deal Spotify has struck with a publisher since the 2018 Music Modernization Act, which updated US copyright law to overhaul statutory licensing for the digital age and improve how songwriters are paid for streams.

The agreement appears to signal a compromise in Spotify's controversial "bundling" rollout, which reclassified its paid streaming plans to include audiobooks, with payments split between music and book publishers.

"Spotify maintains its bundle, but with this direct deal [with UMPG], it has evolved to account for broader rights, including a different economic treatment for music and non-music content," a Spotify spokesperson told Music Business Worldwide.

The Mechanical Licensing Collective, a non-profit under the US Copyright Office created by the MMA, sued Spotify over the issue, claiming the company was underpaying songwriters, composers, and publishers.

UMG CEO Lucian Grainge said in a statement that the deal is an example of his company's "vision" for "Streaming 2.0," which focuses on increasing value through subscription levels and product sales, rather than on streaming scale alone.

"This agreement furthers and broadens the collaboration with Spotify for both our labels and music publisher, advancing artist-centric principles to drive greater monetization for artists and songwriters, as well as enhancing product offerings for consumers," Grainge said.

The partnership will help Spotify make "paid music subscriptions even more attractive to a broader audience of fans around the world," Spotify CEO Daniel Ek said in the statement.